Hydraulic Fracturing and "Spotty" Regulation: Why the Federal Government Should Let States Control Unconventional Onshore Drilling

Article excerpt

I. INTRODUCTION

Recent years have witnessed a shift of focus in the oil and gas industry. Conventional sources of energy are drying up.1 Global demand is on the rise.2 And offshore drilling, though potentially extremely lucrative, has proven to be a risky endeavor.3 As many experts see it, solutions for developers must now come in the form of unconventional onshore extraction techniques, which allow operators to tap reserves previously thought uneconomical or even impossible to produce.4 While developers have traditionally focused on cheap, vertical wells and shallow pools of oil and gas, future economic success will likely require expensive directional drilling and unconventional sources of energy.5

The Barnett Shale play in Texas offers an illustrative example. One of the largest natural gas discoveries in the world, the field sits directly below the city of Fort Worth, Texas, where gas extraction is only possible at a price of $2-3 million per well.6 Even then, drilling would not be economical without the use of hydraulic fracturing7 (often referred to as 'Tracking" or "hydrofracking"), a technique used to break up source rock by injecting large amounts of water and other substances into a well at such high pressures that the rock cracks, or fractures.8 The injected fluid usually contains a propping agent (normally sand or artificial ceramic beads), which "props open" the fracture and allows oil and gas to flow to the wellhead.9

Hydrofracking in the Barnett Shale is often combined with horizontal drilling, a technique that extends a well's reach and allows operators to produce gas in urban areas where population concerns complicate the drilling process. These methods are also employed in rural regions. In the Williston Basin of western North Dakota and eastern Montana, for example, fracking and horizontal drilling enable developers to target tight shale plays where oil could not be efficiently produced only a decade or two ago.11 In fact, such wellstimulation techniques have become so efficient and so lucrative for oil producers in the U.S. that most of the country's oil and gas billionaires have made their fortunes investing in onshore, not offshore, drilling.12

At the same time, few onshore operations pose more concerns than hydraulic fracturing. The debate regarding its potential negative environmental effects has morphed into an outright firestorm in recent years, with drilling advocates staunchly defending the practice13 but facing fierce opposition from environmental groups and even politicians.14 New York Attorney General Eric Schneiderman, for example, has promised to sue to keep hydrofracking out of his state until more information is available regarding its environmental effects.15

Although hydraulic fracturing has been widely employed by the energy industry for more than sixty years, the last decade has witnessed an intense push for more government regulation, especially from the federal level.16 This Comment will discuss the various legal issues implicated by this enormously lucrative practice, as well as evaluate the desirability of additional federal controls.

Ultimately, this Comment argues that regulatory decisions in this realm are best left to the states. While environmental concerns over hydrofracking should not be ignored, in many cases they have been overstated. More importantly, the characteristics of reserves (and therefore specific hydraulic fracturing techniques) vary from state to state, making the success of any regulatory system highly dependent on regulators' knowledge of local and regional industry realities. Each of the nation's major oil- and gas-producing states have effectively grappled with both the environmental and legal challenges posed by the practice since its inception more than half a century ago, and they have done so in a way that has not only generally protected public health but also encouraged economic growth and preserved state common law theories regarding oil and gas development and tort liability. …